Method for efficient investment and distribution of assets

Abstract

A portfolio is invested into a multiplicity of investments pool each having different assumed average rates of return. A first pool has an assumed average first rate of return that is the lowest rate of return of all the pools. Distributions are first withdrawn from the first pool, as desired, before withdrawing funds from any of the other pools. At least part of the assets of a second pool which has an assumed second rate of return being the next lowest rate of return are converted into a new pool when the first pool is exhausted. The assets of the new pool are invested in investments having the same assumed average rate of return as the first pool. Therefore, one of the investment pools is designated to have funds withdrawn from it and the other investment pools can be invested for potentially higher rates of return and more tax efficiently.

Description

BACKGROUND OF THE INVENTION [0001] 1. Field of the Invention [0002] The invention relates to a method for investing money in a tax-efficient and risk efficient manner and for supporting and distributing a desired current and future tax efficient income stream. [0003] 2. Description of the Related Art [0004] Many different money management strategies exist all having varying degrees of risk and return. There are a number of different ways of thinking about and characterizing risk and return. Firstly, short-term, high credit quality vehicles are generally low risk because the investment principal is relatively safe, the investment will fluctuate little if at all relative to the market or interest rates, and the assets of the investment are generally more liquid. Examples of short-term vehicles abound ranging from passport savings accounts, certificates of deposit, money market accounts, and short-term government and investment grade corporate bonds, to name a few. In this range of inv...

AI Technical Summary

Benefits of technology

[0012] Because the first investment pool is setup to generate income and is available for handling distributions, the remaining funds can avail themselves of investments positioned for a longer time period having a higher rate of return and at the same time be tax sheltered. Therefore, one can gain the benefits and assume the risk of higher volatile investments and at the same time be assured a short to medium-term cash flow.

[0014] In accordance with an added mode of the invention, there is the step of distributing assets, being a combination of income and return of principle, from the first investment pool before distributing assets from any other investment pool. Because the distribution is a combination of income and return of principle, tax liabilities are minimized.

Problems solved by technology

Firstly, short-term, high credit quality vehicles are generally low risk because the investment principal is relatively safe, the investment will fluctuate little if at all relative to the market or interest rates, and the assets of the investment are generally more liquid.

Medium and long-term investments generally have additional firm specific, market and / or liquidity risks.

However, such investments carry higher risks with no guarantee of return.

A user enters information about his / her portfolio into a computer system and a desired level of downside risk.

However, in the end, the user has no real understanding of his overall investment strategy but is offered risk protection for a given price.

Once again, an extremely complicated investment strategy is put further which may be effective but is generally not comprehended by the average investor.

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